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UK banks withdraw mortgage products as BOE threatens to hike interest rates

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UK banks have started to withdraw their mortgage products over fears that the Bank of England (BOE) will be forced to act to stabilise the pound. This follows the negative reaction of markets to the chancellor’s mini-budget.

The announcements came overnight and on the morning of Tuesday, September 27 as banks looked to protect themselves in a volatile market

Virgin Money and Skipton Building Society have temporarily withdrawn their entire range, while Halifax the country’s largest lender is to remove fee-paying mortgages. The latter allows for borrowers to pay a fee in exchange for a lower interest rate.

The BOE indicated on Monday that it would do whatever was necessary to stabilise the pound and to bring back inflation within the two per cent target that prompted fears of an imminent rate rise.

Some experts are now talking of interest rates rising to as high as six per cent and a return to the dark times of the mid-eighties.

The banks involved all said that the withdrawal was in response to changes in the cost of funding and that they would wait for the market to settle before reintroducing the mortgage products.

They do, however, stress that approved mortgages will be processed as normal.

Industry insiders believe the situation should begin to normalise by the end of the week. The chancellor is due to meet with MPs to discuss the reaction to his min-budget and to lay out future plans.

An announcement on the way forward by the minister could settle the market, however, it could also add fuel to the fire.

For now, homebuyers will play a waiting game as UK banks withdraw mortgage products temporarily.


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Peter McLaren-Kennedy

Originally from South Africa, Peter is based on the Costa Blanca and is a web reporter for the Euro Weekly News covering international and Spanish national news. Got a news story you want to share? Then get in touch at editorial@euroweeklynews.com.



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